STEIN ROE MUTUAL FUNDS
SEMIANNUAL REPORT
MARCH 31, 2000
PHOTO OF: HANDS ON GLOBE.
STEIN ROE EQUITY FUND
INTERNATIONAL FUND
INTERNATIONAL FUND
LOGO: STEIN ROE MUTUAL FUNDS
SENSIBLE RISKS. INTELLIGENT INVESTMENTS.(R)
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CONTENTS
================================================================================
From the President................................................ 1
Stephen E. Gibson's thoughts on international investing
Performance Summary............................................... 2
Questions & Answers............................................... 3
International Fund -- An interview with Portfolio
Managers Michael Ellis, Charles Roberts and Deborah Snee
Fund Highlights................................................... 6
Portfolios of Investments......................................... 8
A complete list of investments with market values
Financial Statements.............................................. 13
Statements of assets and liabilities, operations
and changes in net assets
Notes to Financial Statements..................................... 19
Financial Highlights.............................................. 22
Selected per-share data and ratios
Must be preceded or accompanied by a prospectus.
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FROM THE PRESIDENT
================================================================================
TO OUR SHAREHOLDERS
I am pleased to present this semiannual report for the Stein Roe
International Fund. For the six-months ended March 31, 2000, your Fund provided
a total return of 9.45%.
The Fund's six-month returns, while solid, lagged the results of the
unmanaged Morgan Stanley Capital International Europe Australia Far East (EAFE)
Index, as shown on page 2. As was the case with the U.S. stock market, global
market gains were almost exclusively generated by a narrow group of
telecommunications (telecom) and technology (tech) companies. Investors
continued to pile into Japan's so-called new-economy stocks, abandoning
industries dependent on a buoyant economy. Tech and telecom shares led the
European markets by a wide margin as well, even though the continent began to
show signs of an economic rebound.
Although the Fund had its fair share of market-leading telecom and tech
stocks, its diversification into other industries curtailed its short-term
performance. As with any investment, however, it's important to maintain a
long-term perspective.
On the pages that follow, Michael Ellis, Charles R. Roberts and Deborah F.
Snee, members of Newport Fund Management and portfolio managers for the Fund
since March 15, 2000, detail the Fund's recent performance and strategy.
As always, we thank you for choosing Stein Roe International Fund and for
giving us the opportunity to serve your investment needs.
Sincerely,
/S/ Stephen E. Gibson
Stephen E. Gibson
President
May 11, 2000
Photo of: Stephen E. Gibson
1
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FUND PERFORMANCE
================================================================================
SIX-MONTH CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS
Periods ended March 31, 1999
SIX
MONTHS ONE FIVE LIFE
(CUMULATIVE) YEAR YEARS OF FUND+
---------------------------------------------
STEIN ROE INTERNATIONAL FUND 9.45% 22.66% 9.64% 7.02%
MSCI EAFE Index 16.86 25.09 12.39 10.35*
================================================================================
+ Fund began operation on 3/1/94.
* 2/28/94
Due to market volatility after the close of the quarterly period, current
performance is lower than shown.
INVESTMENT COMPARISON
================================================================================
GROWTH OF A $10,000 INVESTMENT
--------------------------------------------------------------------------------
Stein Roe International Fund
[LINE CHART]
Lipper International
Fund Average Stein Roe
(150 funds) MSCI EAFE Index International Fund
3/1/94 9565 9569 9760
3/31/95 9441 10150 9535
3/31/96 11011 11403 10914
3/31/97 12000 11570 11586
3/31/98 14330 13721 12675
3/31/99 14338 14549 12317
3/31/00 19480 18204 15106
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total
return includes changes in share price and reinvestment of income and capital
gains distributions. The above illustration assumes a $10,000 investment on
March 1, 1994, and reinvestment of income and capital gains distributions. The
Morgan Stanley Capital International Europe Australia Far East (MSCI EAFE) Index
is an unmanaged group of securities that differs from the composition of any
Stein Roe fund; it is not available for direct investment. The Lipper
International Fund Average represents an average total return for mutual funds
with similar investment objectives as the Fund (peer group) as calculated by
Lipper, Inc. Foreign investing involves market, political, currency and
accounting risks not associated with domestic securities.
2
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QUESTIONS & ANSWERS
================================================================================
AN INTERVIEW WITH CHARLES R. ROBERTS, MICHAEL ELLIS AND DEBORAH F. SNEE,
PORTFOLIO MANAGERS OF STEIN ROE INTERNATIONAL FUND
FUND DATA
INVESTMENT OBJECTIVE:
Stein Roe International Fund seeks long-term growth and invests all of its
assets in SR&F International Portfolio. The Portfolio invests primarily in
stocks of large foreign companies. It seeks broad diversification both in
terms of countries and issuers.
FUND INCEPTION:
March 1, 1994
TOTAL NET ASSETS:
$148.8 million
Effective March 15, 2000, Charles R. Roberts, Michael Ellis and Deborah F. Snee
replaced Nicholas Ghajar as co-managers of the Fund. On that date, each of the
co-managers became joint employees of Newport Fund Management, Inc., Stein Roe &
Farnham, Inc. and Colonial Management Associates, Inc. (Colonial), an affiliate
of Stein Roe. Both Colonial and Stein Roe are indirect, wholly-owned
subsidiaries of Liberty Financial Companies.
Q: HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD ENDED MARCH 31, 2000?
A: The Fund's total return was 9.45% for the six-month period, compared to the
gain of 16.86% for the unmanaged Morgan Stanley Capital International Europe,
Australasia Far East (MSCI EAFE) Index.
Q: WHAT FACTORS CONTRIBUTED TO THE PORTFOLIO'S PERFORMANCE?
A: The previous investment management team had positioned the Portfolio to have
a relatively large weighting in cyclical companies - in the paper, housing and
other economically sensitive sectors--in anticipation of rebounding economic
growth in Europe and Japan and stronger commodity prices. Unfortunately, the
economies of both regions proved more sluggish than expected and commodity
prices - other than oil - remained flat, putting pressure on cyclical stocks and
causing the Portfolio to lag its benchmark.
On a more positive note, the Portfolio was well-positioned in
telecommunications and technology stocks, which led the world's markets during
Photos of:Charles R. Roberts, Michael Ellis and Deborah F. Snee
3
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QUESTIONS & ANSWERS CONTINUED
================================================================================
the period. Fueled by the exploding demand for voice, data, Internet and
wireless services, tech and telecom companies posted strong gains.
One of the brightest spots for the Portfolio was Japanese telecommunications
company NTT DoCoMo (2.96% of net assets), which was one of our largest holdings.
Demand has been quite strong for DoCoMo's I-mode phones, which provide Internet
access at very attractive prices. Dutch phone company KPN (0.80% of net assets)
has over the last several years done a terrific job of transforming itself from
a stodgy, state-owned, fixed-line telephone company into a dynamic
communications company delivering cellular, fiber optics and Internet services.
Q: WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE ASSUMING MANAGEMENT OF THE
FUND?
A: Perhaps the most noticeable change was the virtual elimination of cyclical
stocks, a reflection of our preference for industry sectors which we believe
offer more attractive opportunities for growth. Those sectors are: business
services, consumer growth, financial services, health care, information
technology, telecommunications and utilities. In selecting stocks for the
Portfolio we look for growth companies with long-term, above average growth in
excess of a company's host country's gross domestic product (GDP). These are
generally companies with sound management, relatively predictable growth rates
and low levels of debt.
Q: CAN YOU PROVIDE US SOME EXAMPLES OF RECENT ADDITIONS TO THE PORTFOLIO?
A: As mentioned before, the Portfolio had sizable holdings in telecommunications
and technology stocks, so we concentrated our purchases in the other five
sectors. In the business services sector, which is a prime beneficiary of the
trend toward outsourcing various business functions, we purchased Capita (1.17%
of net assets). This U.K.-based company is a leader in its industry, serving the
government and education areas.
Given the rather lackluster performance of the European and Japanese
economies, we were very selective in the consumer sector. We concentrated our
purchases in companies that have a track record of generating consistently good
earnings and expanding market share no matter what the economic backdrop. In
particular, we bought the well-known food concern Nestle (1.07% of net assets)
and French health and beauty goods maker L'Oreal (1.04% of net assets).
Q: YOU SIGNIFICANTLY INCREASED THE PORTFOLIO'S HOLDINGS IN FINANCIAL SERVICES AS
WELL. WHAT GROWTH TRENDS DID YOU IDENTIFY THERE?
A: The populations of Europe and Japan are aging at a much faster rate
4
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QUESTIONS & ANSWERS CONTINUED
================================================================================
than that of the United States, but their pension funds are significantly
underfunded. That's prompted a major move toward privately-run pension funds.
Skandia (1.55% of net assets), a Swedish provider of mutual funds and other
financial products, has benefited from the privatization trend, as well as tax
law modifications designed to spur more retirement savings.
Q: WHAT'S AHEAD FOR WORLD MARKETS AND THE FUND?
A: Historically, Wall Street and overseas markets have generally moved in
different directions, and we believe this will continue to be true in the
long-term. In the short-term, however, the correlation is higher. This means
that factors that cause volatility here also tend to create ripples worldwide.
The Fed has been on an overt course of progressively raising interest rates in
an attempt to cool the torrid pace of economic expansion and implicitly to
preempt inflationary pressure.
Higher interest rates tend to equate with lower price-earnings ratios (PEs).
Recently, PEs have been high, by historical standards anyway, and this
combination has led to considerable volatility, particularly in NASDAQ stocks
through the first quarter of this year.
Although the major overseas markets of Europe and Japan have been at
different stages of their cycle, they have nevertheless been affected near term
by these trends. We believe, however, that the rationale for worldwide
diversification is exceptionally strong at this point. Japan's problems are well
known and its economy, after a long period of recession, has shown signs of
life; the Tokyo stock market index is still 50% lower than its peak 10 years
ago. In Europe the benefits of economic, fiscal and monetary union are beginning
to be felt and, after a decade, unemployment has begun to fall. The Fund is
invested in large and high-quality companies which we believe are leaders in the
segments driving growth over the next few years.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return performance
includes changes in share price and reinvestment of income and capital gains
distributions. Share price and investment returns will vary, so you may have a
gain or loss when you sell shares. Portfolio holdings are as of March 31, 2000,
and are subject to change. The MSCI EAFE Index is an unmanaged group of stocks
not associated with any Stein Roe fund; it is not available for direct
investment. Foreign investments involve market, political and currency risks not
generally associated with domestic securities. Emerging market investing also
involves these risks, and emerging market equities are generally more volatile
and less liquid than securities in either the U.S. or countries with established
equity markets.
5
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FUND HIGHLIGHTS AS OF MARCH 31, 2000
================================================================================
SR&F INTERNATIONAL PORTFOLIO
TOP 10 EQUITY HOLDINGS (% OF NET ASSETS)
--------------------------------------------------------------------------------
Vodafone Airtouch 3.4 Nokia 2.2
NTT Mobile Communications 3.0 Allianz 2.1
Samsung Electronics 2.5 Ericsson 2.1
Murata Manufacturing 2.3 Hutchison Whampoa 2.0
Takeda Chemical Industries 2.3 Ito En Ltd. 2.0
Total 23.9%
================================================================================
EQUITY PORTFOLIO HIGHLIGHTS
MSCI
PORTFOLIO EAFE INDEX
--------------------------------
Number of holdings 110 --
Median Market Capitalization weighted ($ Mil) 19,147.2 10,995.9
================================================================================
PIE CHART:
ECONOMIC SECTOR BREAKDOWN
Equity Portfolio MSCI EAFE
Technology 33% 9%
Comm Serv 17% 23%
Financials 12% 20%
Consumer - Staples 12% 14%
Health Care 11% 3%
Consumer - Cyclical 8% 10%
Capital Goods 5% 7%
Utilities 2% 3%
Basic Materials 4%
Transportation 2%
Energy 4%
Unclassified 1%
6
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FUND HIGHLIGHTS CONTINUED
================================================================================
COUNTRY ALLOCATIONS
International Fund MSCI EAFE Index
Japan 26.2% 41.8%
United Kingdom 19.9% 17.7%
France 9.7% 5.8%
Netherlands 8.0% 3.6%
Germany 6.5% 4.9%
Sweden 4.6% 2.1%
Switzerland 4.4% 3.1%
Finland 3.8% 0.7%
Italy 3.4% 7.3%
Hong Kong 3.2% 3.0%
South Korea 2.7%
Canada 1.7%
Spain 1.6% 2.5%
Singapore 1.4% 1.2%
Belgium 1.0% 1.1%
Portugal 0.8% 0.6%
Israel 0.5%
Malaysia 0.3%
Philippines 0.1%
Indonesia 0.2%
Other Assets
Note: Holdings are disclosed as a percentage of SR&F International Portfolio's
total investments. The MSCI EAFE Index is an unmanaged group of international
securities that differs from the composition of any Stein Roe fund; it is not
available for direct investment. The MSCI EAFEIndex has holdings in countries in
which the Fund does not invest. As a result, do not total to 100% MSCI EAFE
Index holdings shown.
7
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SR&F INTERNATIONAL PORTFOLIO
================================================================================
INVESTMENT PORTFOLIO
March 31, 2000 (Unaudited, in thousands)
COMMON STOCKS - 105.9% COUNTRY SHARES VALUE
--------------------------------------------------------------------------------
CONSTRUCTION - 0.9%
Heavy Construction-Non Building Construction
Chareon Pokphand Indonesia (a).... In 150 $ 70
Ever Shine Textile (a).............. In 51 8
Vivendi ............................ Fr 9 1,073
--------
1,151
FINANCE, INSURANCE & REAL ESTATE - 14.1%
DEPOSITORY INSTITUTIONS - 3.6%
Banca Fideuram SpA ................ It 138 2,062
Deutsche Bank AG ................... DM 17 1,112
Generale Banque VVPR STRIP (a)..... Bg 1 (b)
Lloyds TSB Group PLC................ KB 132 1,392
--------
4,566
HOLDING & OTHER INVESTMENT OFFICES - 0.1%
Fortis VVPR STRIP (a)............... Bg 117 1
Fortis (a).......................... Bg 13 99
--------
100
HOLDING COMPANIES - 2.7%
Fortis Amev NV...................... Nt 35 884
Hutchison Whampoa Ltd. ............. HK 142 2,562
--------
3,446
INSURANCE CARRIERS -7.4%
AXA ............................... Fr 8 1,181
Aegon NV............................ Nt 26 2,075
Allied Zurich PLC................... KB 135 1,401
Allianz AG ......................... DM 7 2,736
Skandia Forsakrings AB ............. Sw 42 1,966
--------
9,359
REAL ESTATE - 0.3%
Real Estate
IOI Properties Berhad ........... Ma 226 384
MANUFACTURING - 43.8%
CHEMICALS & ALLIED PRODUCTS - 14.4%
Altana AG ......................... DM 19 1,406
Ares-Serono Group (a)............... SZ (b) 1,466
Christian Dior SA................... FR 6 1,341
Glaxo Holdings PLC ................ KB 39 1,115
KAO Corp. ......................... Ja 52 1,590
L'Oreal ............................ FR 2 1,323
Roche Holding AG ................... SZ (b) 1,887
SmithKline Beecham PLC ............. KB 134 1,771
Takeda Chemical Industries Ltd. .... Ja 41 2,914
UCB SA ............................ Bg 36 1,297
Yamanouchi Pharmaceutical Co........ Ja 40 2,189
--------
18,299
COMMUNICATION EQUIPMENT - 5.3%
Racal Electronics PLC ............. KB 261 1,756
Sony Corp (New) ................... Ja 8 1,137
Sony Corp. ......................... Ja 8 1,129
LM Ericsson Telecommunications...... Sw 31 2,701
--------
6,723
8
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SR&F INTERNATIONAL PORTFOLIO CONTINUED
================================================================================
COUNTRY SHARES VALUE
--------------------------------------------------------------------------------
MANUFACTURING - (CONTINUED)
ELECTRONIC & ELECTRICAL EQUIPMENT - 2.3%
Arm Holdongs PLC (a)................ KB 11 $ 634
Bowthorpe PLC ...................... KB 41 757
STMicroelectronics NV............... Nt 9 1,568
--------
2,959
ELECTRONIC COMPONENTS - 9.4%
Electrocomponents PLC ............. KB 77 784
Epcos AG............................ DM 10 1,253
Koninklijke Philips Electric........ 9 1,456
Murata Manufacturing Co., Ltd. .... Ja 12 2,915
Rohm Co., Ltd....................... Ja 7 2,364
Samsung Electronics ................ Ko 21 3,227
--------
11,999
FOOD & KINDRED PRODUCTS - 4.0%
Carrefour SA ...................... Fr 9 1,131
Ito En, Ltd. ...................... Ja 21 2,548
Nestle AG Registered Shares ...... Sz 1 1,360
--------
5,039
MACHINERY & COMPUTER EQUIPMENT - 3.4%
Canon, Inc.......................... Ja 45 1,950
Equant NV (a)....................... Nt 12 1,003
Fujitsu Ltd. ...................... Ja 45 1,380
--------
4,333
MEASURING & ANALYZING INSTRUMENTS - 0.5%
Marconi PLC......................... KB 50 597
MISCELLANEOUS MANUFACTURING - 1.9%
Secom Co., Ltd. ................... Ja 28 2,399
PRINTING & PUBLISHING - 0.5%
Singapore Press Holdings Ltd........ Si 40 638
STONE, CLAY, GLASS & CONCRETE - 0.1%
Southeast Asia Cement Holdings, Inc. (a) Ph 14,370 150
HUMAN RESOURCE PROGRAMS - 2.0%
Adecco SA ......................... Sz 2 1,215
Altran Technologies SA ............. Fr 5 1,312
--------
2,527
RETAIL TRADE - 3.7%
FOOD STORES - 1.0%
Numico N.V.......................... Nt 36 1,312
GENERAL MERCHANDISE STORES - 1.7%
Seven-Eleven Japan Co., Ltd. ....... Ja 19 2,183
HOME FURNISHINGS & EQUIPMENT - 1.0%
Securitas AB, Class B ............. Sw 53 1,282
9
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SR&F INTERNATIONAL PORTFOLIO CONTINUED
================================================================================
COUNTRY SHARES VALUE
--------------------------------------------------------------------------------
SERVICES - 17.8%
BUSINESS SERVICES - 4.0%
Baltimore Technologies PLC (a)...... KB 4 $ 517
CMG PLC ............................ KB 15 1,285
Capita Group PLC ................... KB 58 1,487
Freeserve PLC (a)................... KB 32 251
Oracle Corp. Japan ................ Ja 2 1,507
--------
5,047
COMPUTER RELATED SERVICES - 8.3%
Atos SA (a)......................... FR 6 765
China.Com Corp. Class A (a)......... HK 3 275
Cap Gemini S.A. ................... FR 8 2,266
Datacraft Asia Ltd. ................ Si 140 1,309
Dixons Group PLC ................... KB (b) (b)
Framtidsfabriken AB ................ Sw 10 251
Hitachi Software Engineering Co., Ltd. (a) Ja 13 1,621
Infosys Technologies ADR (a)....... In 1 199
Orix Corp. ......................... Ja 9 1,371
Pixelpark AG ...................... DM 2 217
Reuters Holdongs PLC ADR .......... KB 7 776
Terra Networks ADR (a)............. Sp 4 345
Trend Micro Inc. ADR ............... Ja 32 556
Tietoenator Oyj ................... Fi 10 611
--------
10,562
COMPUTER SOFTWARE - 3.3%
Check Point Software Technology (a). 2 323
Logica PLC ......................... KB 42 1,418
Misys PLC ......................... KB 74 1,002
SAP AG ............................ DM 3 1,484
--------
4,227
HEALTH SERVICES - 1.1%
Sanofi-Synthelabo SA (a)............ Fr 36 1,352
OTHER SERVICES - 1.1%
Randstad Holding N.V. ............. Nt 39 1,432
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 25.6%
COMMUNICATIONS - 7.5%
ADVA AG Optical Networking (a)...... DM (b) 246
Cable & Wireless PLC ............... KB 62 1,164
Carlton Communications PLC.......... KB 83 981
Intershop Communications AG (a)..... DM (b) 249
NortelNetworks Corp................. Ca 18 2,319
Orckit Communications Ltd. (a)...... 4 288
Vodafone AirTouch PLC ............. KB 781 4,334
--------
9,581
GAS SERVICES - 1.2%
Centrica PLC (a).................... KB 406 1,550
10
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SR&F INTERNATIONAL PORTFOLIO CONTINUED
================================================================================
COUNTRY SHARES VALUE
--------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - (CONTINUED)
TELECOMMUNICATION - 16.9%
Colt Telecom Group PLC (a).......... KB 25 $ 1,156
Cable & Wireless HKT Ltd. (a)....... HK 91 237
China Telecom Ltd. (a).............. HK 142 1,257
Energis PLC (a)..................... KB 13 582
France Telecom S.A. ................ Fr 7 1,256
Koninklijke KPN..................... Nt 9 1,015
Nokia OYJ ......................... Fi 13 2,768
NTT Data Communications Systems Co.. Ja (b) 1,879
NTT Mobile Communication Network (a) Ja (b) 3,771
SK Telecom Co., Ltd.(a)............. Ko (b) 358
Seat Pagine Gialle SpA ............. It 240 1,174
Sonera Group Oyj ................... Fi 27 1,834
Telecel-Comunicacaoes Pessoais, SA (a) Pt 53 1,034
Telecom Italia SpA ................. It 202 1,374
Telefonica de Espana................ Sp 23 1,751
--------
21,446
--------
TOTAL COMMON STOCKS (Cost of $112,680) 134,643
--------
--------------------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS - 0.1%
Mining & Energy
BG Transoc Holdings PLC
7.000% 12/16/24................. KB 25 40
4.188% 12/14/22................. KB 25 40
7.053% 12/14/09................. KB 25 39
--------
TOTAL CORPORATE FIXED INCOME BONDS (Cost of $123) 119
--------
--------------------------------------------------------------------------------
WARRANTS - 0.1%
Siam Commercial Bank................ Th 67 16
Vivendi (a) ...................... Fr 18 95
--------
TOTAL WARRANTS (Cost of $0)............ 111
--------
--------------------------------------------------------------------------------
RIGHTS - 0.0%
Lafarge............................. Fr 12 (b)
--------
TOTAL RIGHTS (Cost of $19)............. (b)
--------
--------------------------------------------------------------------------------
TOTAL INVESTMENTS (Cost of $112,822) (c) 134,873
--------
11
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SR&F INTERNATIONAL PORTFOLIO CONTINUED
================================================================================
PAR VALUE
--------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 9.8%
Repurchase Agreement with SBC Warburg, Ltd. dated
03/31/00, due 04/03/00 at 6.100%, collateralized
by a U.S. Treasury Note Maturing in 2028
(Repurchase Proceeds $12,532)....... $12,526 $ 12,526
--------
--------------------------------------------------------------------------------
Other Assets & Liabilities, Net (15.9%) (20,176)
--------
NET ASSETS -100.0%..................... $127,223
--------
--------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
--------------------------------------------------------------------------------
(a) Non-income producing.
(b) Rounds to less than one.
(c) On March 31, 2000, the cost of investments for federal income tax purposes
was identical. Net unrealized appreciation was $22,051, consisting of gross
unrealized appreciation of $28,466 and gross unrealized depreciation of
$6,415.
SUMMARY OF SECURITIES BY
COUNTRY COUNTRY VALUE % OF TOTAL
------- ------- ----- ---------
Japan ................................. Ja $35,403 26.2
United Kingdom......................... KB 26,829 19.9
France................................. Fr 13,095 9.7
Netherlands ........................... Ne 10,745 8.0
Germany................................ G 8,703 6.5
Sweden................................. Sw 6,200 4.6
Switzerland............................ Sz 5,928 4.4
Finland ............................... Fi 5,213 3.8
Italy.................................. It 4,610 3.4
Hong Kong.............................. HK 4,331 3.2
Korea.................................. Ko 3,585 2.7
Canada................................. Ca 2,319 1.7
Spain.................................. Sp 2,096 1.6
Singapore.............................. Si 1,947 1.4
Belgium................................ Be 1,397 1.0
Portugal............................... Pt 1,034 0.8
Israel................................. Is 611 0.5
Malaysia............................... Ma 384 0.3
Indonesia.............................. In 277 0.2
Philippines............................ Ph 150 0.1
Thailand............................... Th 16 (b)
--------- --------
$134,873 100.0
Acronym Name
------- ----
ADR American Depositary Receipt
STRIP Separately Traded Receipt of
Interest and Principal
See accompanying Notes to Financial Statements.
12
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STEIN ROE INTERNATIONAL PORTFOLIO
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
(All amounts in thousands, except per-share data)
ASSETS
Investments, at market value (cost $112,822)..................... $134,873
Short-term obligations........................................... 12,526
Cash including foreign currencies (cost $2,155).................. 1,101
Receivable for:
Investments sold.............................................. 15,459
Dividends..................................................... 1,117
Other ........................................................... 28
--------
Total Assets.................................................. 165,104
--------
LIABILITIES
Payable for investments purchased................................ 36,814
Accrued:
Management fee................................................ 108
Transfer agent fee............................................ 1
Bookkeeping fee............................................... 2
Other............................................................ 956
--------
Total Liabilities............................................. 37,881
--------
Net Assets.................................................... $127,223
========
See accompanying Notes to Financial Statements.
13
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STEIN ROE INTERNATIONAL PORTFOLIO
================================================================================
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
(All amounts in thousands)
INVESTMENT INCOME
Dividends ....................................................... $ 1,431
Interest ........................................................ 267
--------
1,698
Foreign taxes withheld........................................... (131)
--------
Total investment income.......................................... 1,567
--------
EXPENSES
Management fee................................................... 565
Bookkeeping fee.................................................. 14
Transfer agent fee............................................... 3
Audit & legal fees............................................... 8
Trustees' fee.................................................... 7
Custodian fee.................................................... 50
Other............................................................ 20
--------
Total expenses................................................... 667
--------
Net investment income......................................... 900
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investments ................................ 9,947
Net realized loss on foreign currency transactions............... (220)
Net change in unrealized appreciation/depreciation on investments
and foreign currency transactions............................. 5,619
--------
Net gain...................................................... 15,346
--------
Increase in Net Assets Resulting from Operations................. $ 16,246
========
See accompanying Notes to Financial Statements.
14
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STEIN ROE INTERNATIONAL PORTFOLIO
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in thousands)
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
2000 1999
------------------------
OPERATIONS
Net investment income ................................. $ 900 $ 2,043
Net realized gain on investments and foreign
currency transactions .............................. 9,727 11,812
Net change in unrealized appreciation/depreciation
on investments and foreign currency transactions ... 5,619 22,685
--------- ---------
Net increase in net assets resulting from operations .. 16,246 36,540
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions ......................................... 348,415 152,210
Withdrawals ........................................... (349,886) (191,012)
--------- ---------
Net decrease from transactions in investors'
beneficial interest ................................ (1,471) (38,802)
--------- ---------
Net increase (decrease) in net assets .............. 14,775 (2,262)
NET ASSETS
Beginning of period ................................... 112,448 114,710
--------- ---------
End of period ......................................... $ 127,223 $ 112,448
========= =========
See accompanying Notes to Financial Statements.
15
<PAGE>
SR&F INTERNATIONAL FUND
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
(All amounts in thousands, except per-share data)
ASSETS
Investments in Portfolio, at value .................................. $ 127,082
Cash ................................................................ 206
Receivable for fund shares sold ..................................... 24,027
Other ............................................................... 16
---------
Total Assets ..................................................... 151,331
---------
LIABILITIES
Payable for fund shares repurchased ................................. 2,421
Accrued:
Administrative fee ............................................... 19
Bookkeeping fee .................................................. 2
Transfer agent fee ............................................... 30
Other ............................................................... 49
---------
Total Liabilities ................................................ 2,521
---------
Net Assets ....................................................... $ 148,810
=========
ANALYSIS OF NET ASSETS
Paid-in capital ..................................................... $ 119,030
Overdistributed net investment income ............................... (1,279)
Accumulated net realized gain on investments and foreign currency
transactions allocated from Portfolio ............................ 9,473
Net unrealized appreciation on investments and foreign currency
transactions allocated from Portfolio ............................ 21,586
---------
Net Assets ....................................................... $ 148,810
=========
Shares outstanding (unlimited number authorized) .................... 11,508
---------
Net asset value per share ........................................... $ 12.93
=========
See accompanying Notes to Financial Statements.
16
<PAGE>
SR&F INTERNATIONAL FUND
================================================================================
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
(All amounts in thousands)
INVESTMENT INCOME
Dividend income allocated from Portfolio ............................ $ 1,106
Interest income allocated from Portfolio ............................ 574
--------
1,680
Foreign taxes withheld allocated from Portfolio ..................... (110)
--------
Total investment income ............................................. 1,570
--------
EXPENSES
Expenses allocated from Portfolio ................................... 666
Administrative fees ................................................. 100
Transfer agent fee .................................................. 166
Bookkeeping fee ..................................................... 14
Trustees' fees ...................................................... 5
Legal fee ........................................................... 17
Custodian fee ....................................................... 1
Audit fee ........................................................... 5
Registration fee .................................................... 15
Reports to shareholders ............................................. 10
Other ............................................................... 26
--------
Total expenses ................................................... 1,025
--------
Net investment income ............................................ 545
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS ALLOCATED FROM PORTFOLIO
Net realized gain on investments .................................... 9,778
Net realized (loss) on foreign currency transactions ................ (60)
Net change in unrealized appreciation/depreciation on
investments and foreign currency transactions .................... 5,612
--------
Net gain ......................................................... 15,330
--------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................... $ 15,875
========
See accompanying Notes to Financial Statements.
17
<PAGE>
SR&F INTERNATIONAL FUND
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in thousands)
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
2000 1999
----------- -------------
OPERATIONS
Net investment income ................................. $ 545 $ 1,541
Net realized gain (loss) on investments and foreign
currency transactions allocated from Portfolio ..... 9,718 11,901
Net change in unrealized appreciation/depreciation
on investments and foreign currency transactions
allocated from Portfolio ........................... 5,612 22,538
--------- ---------
Net increase in net assets resulting
from operations ................................. 15,875 35,980
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income .............. (1,103) (1,137)
Distributions from net realized capital gains ......... (1,585) --
--------- ---------
(2,688) (1,137)
--------- ---------
FUND SHARE TRANSACTIONS
Receipt for shares sold ............................... 533,196 266,314
Value of distributions reinvested ..................... 1,987 777
Cost of shares repurchased ............................ (514,486) (301,252)
--------- ---------
Net increase (decrease) from fund share transactions .. 20,697 (34,161)
--------- ---------
Net increase in net assets ............................ 33,884 682
NET ASSETS
Beginning of period ................................... 114,926 114,244
--------- ---------
End of period ......................................... $ 148,810 $ 114,926
========= =========
Overdistributed Net Investment Income ................. $ (1,279) $ (721)
--------- ---------
ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Sold .................................................. 40,623 23,473
Issued for distributions reinvested ................... 155 76
Repurchased ........................................... (38,790) (26,503)
--------- ---------
Net increase (decrease) in fund shares ............. 1,988 (2,954)
Shares outstanding at beginning of period ............. 9,520 12,474
--------- ---------
Shares outstanding at end of period ................... 11,508 9,520
========= =========
See accompanying Notes to Financial Statements.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS UNAUDITED
================================================================================
(All amounts in thousands)
NOTE 1. ORGANIZATION
Stein Roe International Fund (the "Fund") is a series of Liberty-Stein Roe
Funds Investment Trust (the "Trust"), an open-end management investment company
organized as a Massachusetts business trust. The Fund invests substantially all
of its assets in SR&F International Portfolio (the "Portfolio"), which seeks
long-term growth of capital by investing primarily in a diversified mix of
foreign securities.
The Portfolio is a series of SR&F Base Trust, a Massachusetts common law trust
organized under an Agreement and Declaration of Trust dated August 23, 1993. The
Portfolio commenced operations on February 3, 1997. At commencement, the Fund
contributed $132,942 in securities and other assets in exchange for beneficial
ownership of the Portfolio. The Portfolio allocates income, expenses, realized
and unrealized gains and losses to each investor on a daily basis, based on
methods approved by the Internal Revenue Service. At March 31, 2000, Stein Roe
International Fund owned 99.9%, of the Portfolio.
================================================================================
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the Fund and
Portfolio. These policies are in conformity with generally accepted accounting
principles, which require management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
The books and records of the Fund and Portfolio are maintained in U.S.
dollars.
SECURITY VALUATIONS
Securities are valued at, depending on the security involved, the last reported
sales price, last bid or asked price, or the mean between the last bid and asked
prices as of the close of the appropriate exchange or other designated time. A
security that is listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary exchange for such
security. Securities and other assets for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Board of Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on trade date. Dividend income is
recorded on the
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
================================================================================
ex-dividend date, and interest income is recorded on the accrual basis. Interest
income includes discount accretion on fixed income securities. Realized gains
and losses from investment transactions are reported on an identified cost
basis.
CURRENCY TRANSACTIONS
For purposes of valuation, assets and liabilities are translated into U.S.
dollars using that day's currency exchange rates that represent the midpoint
between the bid and asked rates. Purchases and sales of securities are
translated into U.S. dollars using the prevailing exchange rate on the dates of
such transactions. The effect of changes in foreign exchange rates on realized
and unrealized security gains and losses is reflected as a component of such
gains and losses.
FORWARD CURRENCY EXCHANGE CONTRACTS
The Portfolio may enter into forward foreign currency exchange contracts under
which the Portfolio is obligated to exchange currencies at specified rates on
specified future dates. Risks arise from the possible inability of
counterparties to meet the terms of their contracts and from movements in
currency values. The Portfolio had no open contracts at March 31, 2000.
FEDERAL INCOME TAXES
No provision is made for federal income taxes since (a) the Fund elects to be
taxed as "a regulated investment company" and makes distributions to its
shareholders to be relieved of all federal income taxes under provisions of
current federal tax law; and (b) the Portfolio is treated as a partnership for
federal income tax purposes and all of its income is allocated to its owners
based on methods approved by the Internal Revenue Service.
The Fund intends to utilize provisions of federal income tax law, which
allows it to carry a realized capital loss forward up to eight years following
the year of the loss, and offset such losses against any future realized gains.
At March 31, 2000, the Fund had no capital loss carryforwards.
DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and pays dividends of any net investment income
and net realized capital gains annually, which are recorded on the ex-dividend
date. Dividends are determined in accordance with income tax principles, which
may treat certain transactions differently from generally accepted accounting
principles. Distributions in excess of tax-basis earnings are reported in the
financial statements as a return of capital. Permanent differences in the
recognition or classification of income between the financial statements and tax
earnings are reclassified to paid-in capital.
Reclassifications in the Fund's accompanying analysis of net assets
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
================================================================================
could be made in 2000 in order to reflect differences between financial
reporting and income tax results. The differences primarily relate to treatment
of investments in passive foreign investment companies and foreign currency
gains and losses.
================================================================================
NOTE 3. TRUSTEES' FEES AND TRANSACTIONS WITH AFFILIATES
MANAGEMENT & ADMINISTRATIVE FEES
The Fund and the Portfolio pay monthly management and admini-strative fees to
Stein Roe & Farnham Incorporated (the "Advisor"), an indirect, wholly-owned
subsidiary of Liberty Financial Companies, Inc. ("Liberty"), for its services as
investment Advisor and Administrator. The management fee for SR&F International
Portfolio is computed at an annual rate of 0.85% on the Portfolio's average
daily net assets. The administrative fee for the Fund is computed at an annual
rate of 0.15% of average daily net assets.
BOOKKEEPING FEE
The Advisor provides bookkeeping and pricing services for a monthly fee equal to
$25 annually plus 0.0025% annually of the Fund's average daily net assets over
$50 million.
TRANSFER AGENT FEE
Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of Liberty,
provides shareholder services for a monthly fee equal to 0.22% annually of the
Fund's average daily net assets and receives reimbursement for certain out of
pocket expenses.
OTHER
Certain officers and trustees of the Trust are also officers of the Advisor. No
remuneration was paid to any trustee or officer of the Trust who is affiliated
with the Advisor.
================================================================================
NOTE 4. SHORT-TERM DEBT
To facilitate portfolio liquidity, the Fund and the Portfolio maintain borrowing
arrangements under which they can borrow against portfolio securities. There
were no borrowings during the six months ended March 31, 2000.
================================================================================
NOTE 5. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales other than short-term
obligations for the six months ended March 31, 2000 were $107,917 and $94,725
respectively.
21
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
================================================================================
STEIN ROE INTERNATIONAL FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
MARCH 31, YEARS ENDED SEPTEMBER 30,
2000 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 12.07 $ 9.16 $ 11.79 $ 10.96 $ 10.25 $ 10.61
-------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a).................... 0.05 0.14 0.07 0.06 0.09 0.12
Net realized and unrealized gain (loss)
on investments allocated from Portfolio.... 1.09 2.87 (2.01) 0.99 0.74 (0.26)
-------- -------- -------- -------- -------- -------
Total from investment operations........... 1.14 3.01 (1.94) 1.05 0.83 (0.14)
-------- -------- -------- -------- -------- -------
DISTRIBUTIONS
Net investment income........................ (0.11) (0.10) (0.11) (0.08) (0.12) (0.05)
Net realized capital gains................... (0.17) -- (0.58) (0.14) -- (0.17)
-------- -------- -------- -------- -------- -------
Total distributions........................ (0.28) (0.10) (0.69) (0.22) (0.12) (0.22)
-------- -------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD.................. $ 12.93 $ 12.07 $ 9.16 $ 11.79 $ 10.96 $ 10.25
======== ======== ======== ======== ======== =======
Ratio of net expenses to average net assets..... 1.54%(d) 1.57%(b) 1.53% 1.55% 1.51% 1.59%
Ratio of net investment income to
average net assets........................... 0.83%(d) 1.16%(b) 0.62% 0.55% 1.01% 1.41%
Portfolio turnover rate......................... N/A N/A N/A 11%(c) 42%(c) 59%(c)
Total return ................................... 9.45%(e) 33.02% (16.67)% 9.84% 8.23% (1.28)%
Net assets, end of period (000's)............... $148,810 $114,926 $114,244 $166,088 $135,545 $83,020
(a) Per share data was calculated using average shares outstanding during the
period.
(b) During the year ended September 30, 1999, the Fund experienced a one-time
reduction in its expenses of twelve basis points as a result of expenses in
a prior period. The Fund's ratios disclosed above reflect the actual rate
at which expenses were incurred throughout the current fiscal year without
the reduction.
(c) Prior to commencement of operations of the Portfolio.
(d) Annualized.
(e) Not annualized.
</TABLE>
22
<PAGE>
<TABLE>
================================================================================
SR&F INTERNATIONAL PORTFOLIO
<CAPTION>
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
MARCH 31, YEARS ENDED SEPTEMBER 30, SEPTEMBER 30,
2000 1999 1998 1997(A)
---------- --------- -------- -------------
<S> <C> <C> <C> <C>
Ratio of net expenses to
average net assets ....... 1.00%(b) 1.03% 1.02% 0.98%(b)
Ratio of net investment
income to average
net assets................ 1.36%(b) 1.70% 1.13% 1.58%(b)
Portfolio turnover rate...... 78% 44% 32% 18%
(a) From commencement of operations on February 3, 1997
(b) Annualized
</TABLE>
23
<PAGE>
TO CONTACT US. . .
================================================================================
BY PHONE 800-338-2550
You can discuss your investment questions with a Stein Roe account
representative by calling us toll free. We'll be happy to answer questions about
your current account, or to provide you with information about opening a Stein
Roe account, including Stein Roe Traditional, Roth and Education IRAs. We're
available Monday through Friday, from 8 a.m. to 8 p.m. ET, and Saturdays from 10
a.m. to 2 p.m. ET.
STEIN ROE'S FUNDS-ON-CALL(R)
24-HOUR SERVICE LINE
Using a touch-tone phone, call our toll-free number, day or night, for your
current account balance, the latest Stein Roe Fund prices and yields and other
information. In addition, if you have a Personal Identification Number (PIN),
you may place orders for the following transactions 24 hours a day:
o Exchange shares between your Stein Roe accounts;
o Purchase fund shares by electronic transfer;
o Order additional account statements and money market fund checks;
o Redeem shares by check, wire or electronic transfer.
RETIREMENT PLAN ACCOUNTS
Call us for information about how we can assist you with your defined
contribution plan, including 401(k) plans. You can reach us toll free at
800-322-1130. For information on Traditional, Roth and Education IRA plans, call
us toll free at 800-338-2550.
BY MAIL OR E-MAIL
If you prefer to contact us by mail, please address all correspondence to: P.O.
Box 8900, Boston, MA 02205-8900. To contact us by e-mail, send correspondence
directly to: [email protected] or visit us at www.steinroe.com on the
Internet.
ADDITIONAL REPORTS
The Funds mail one shareholder report to each shareholder address. If you would
like more than one report, please call 800-338-2550 and additional reports will
be sent to you.
Must be preceded or accompanied by a prospectus.
24
<PAGE>
INVESTMENT TRUST
================================================================================
TRUSTEES
John A. Bacon Jr. Private Investor
William W. Boyd
Chairman and Director, Sterling Plumbing
Group Inc.
Lindsay Cook
Executive Vice President, Liberty Financial
Companies, Inc.
Douglas A. Hacker
Executive Vice President and Chief Financial Officer,
United Airlines
Janet Langford Kelly
Executive Vice President-Corporate Development,
General Counsel and Secretary, Kellogg Co.
Charles R. Nelson
Van Voorhis Professor of Political Economy,
University of Washington
Thomas C. Theobald
Managing Partner, William Blair Capital Partners
OFFICERS
Stephen E. Gibson, President
William D. Andrews, Executive Vice President
Loren A. Hansen, Executive Vice President
Kevin M. Carome, Executive Vice President,
Secretary
Christine Balzano, Vice President
David Brady, Vice President
Daniel Cantor, Vice President
J. Kevin Connaughton, Vice President, Treasurer
William Garrison, Vice President
Erik Gustafson, Vice President
Harvey Hirschhorn, Vice President
Gail D. Knudsen, Vice President, Controller
Lynn C. Maddox, Vice President
Mary D. McKenzie, Vice President
Art McQueen, Vice President
Nicholas Norton, Vice President
Michael Fisher, Assistant Treasurer
AGENTS AND ADVISORS
Stein Roe & Farnham Incorporated
Investment Advisor State
Street Bank and Trust Company
Custodian SteinRoe Services Inc.
Transfer Agent
Bell, Boyd & Lloyd
Legal Counsel to the Fund
PricewaterhouseCoopers LLP
Independent Accountants
25
<PAGE>
THE STEIN ROE MUTUAL FUNDS
FIXED INCOME FUNDS
Cash Reserves Fund
Municipal Money Market Fund
Intermediate Municipals Fund
Managed Municipals Fund
High-Yield Municipals Fund
Intermediate Bond Fund
Income Fund
High Yield Fund
EQUITY FUNDS
Balanced Fund
Growth & Income Fund
Disciplined Stock Fund
Growth Stock Fund
Growth Investor Fund
Young Investor Fund
Midcap Growth Fund
Large Company Focus Fund
Capital Opportunities Fund
International Fund
Small Company Growth Fund
Stein Roe Mutual Funds
P.O. Box 8900
Boston, MA 02205-8900
Financial Advisors call: 800-322-0593
Shareholders call: 800-338-2550
www.steinroe.com
Liberty Funds Distributor, Inc.
DIR-03/093B-0400
